Stupidity is contagious. It gets us all from time to time. Even respectable companies can catch it. As I do every week, let's take a look at five dumb financial events this week that may make your head spin.
1. Skype out
The market isn't warming up to Microsoft's (Nasdaq: MSFT ) $8.5 billion purchase of Skype.
Is Mr. Softy overpaying for the popular voice and video chat platform? Will this anger wireless carriers supporting Windows Phone 7 if the incorporation of Skype eats into voice call charges? Was this a clever use of Microsoft's offshore greenery?
Those questions have been pondered to death this week. I'm just here to call out Microsoft and eBay (Nasdaq: EBAY ) .
It was eBay that sold a 65% stake in Skype for $1.9 billion less than two years ago, implying a value of $2.75 billion for the fast-growing communications software. Yes, eBay was able to cash in on its 35% stake, but it left billions on the table by selling too soon.
And Microsoft? Where were you back in September 2009 when eBay couldn't get more than $3 billion for all of Skype?
2. The hardcore side of Sears
Sears Holdings (Nasdaq: SHLD ) can't catch a break. The struggling retailer that has been consistently posting negative comps on this end of the millennium apologized this week for making skin flicks available through its namesake website.
The American Family Association called out the iconic retailer after discovering that pornographic DVDs could be ordered by minors and others on Sears.com. Religious organizations on crusades often get cynical eyes a-rolling, but the AFA was spot-on here.
The videos violate Sears' merchandise standards, so the retailer has removed the salty titles that were being provided by a third party vendor.
Poor Sears. Even smut couldn't get shoppers excited.
3. Ring around the Rosie
Sirius XM Radio (Nasdaq: SIRI ) will be losing one of its bigger talk show hosts when Rosie O'Donnell's Rosie Radio concludes its live run in three weeks, but the chatty comedienne won't be entirely off the satellite radio airwaves.
Sirius XM will be airing "best of" segments during the summer and then rebroadcasting her new daily television show that will debut this fall on Oprah Winfrey's struggling OWN cable channel.
Whether you're a fan of O'Donnell, there's something not right about replacing exclusive content with reruns from a visual medium. I do find value as an investor in hearing CNBC as I drive around, but premium radio can do better than that. If Sirius XM wants to bump its monthly rates higher later this year, it will have to shell out more -- not less -- for fresh content.
4. It's a small, small world
It's true that Disney's (NYSE: DIS ) annual report wasn't pretty on the surface. Revenue grew by a mere 6%, and net income actually inched marginally lower. Fears that Disney is in a funk after a rare quarterly miss, quite frankly, are overblown.
The family entertainment giant isn't broken. Yes, Mars Needs Moms was a flop, compared with last year's multiplex success of Alice in Wonderland. Disney's studio entertainment revenue will always be lumpy. However, if you back out the studio, Disney's revenue and segment operating income would have climbed a reasonable 10% and 11%, respectively.
Disney's stock still closed more than 5% lower on Wednesday after Tuesday night's report. Really? If the market is going to put so much weight in Disney's studio division, it bears pointing out that fresh installments in the Cars and Pirates of the Caribbean franchises are due out in the coming weeks.
5. The Cisco kids
The news doesn't get any better for Cisco (Nasdaq: CSCO ) .
The fallen tech darling posted another uninspiring quarter, and CEO John Chambers is hosing down the future again. He concedes that the days of targeting 12% to 18% growth are toast. The networking gear market is too competitive, and Cisco has failed in trying to buy its way into headier growth.
Its heart is in the right place. It chose to tap a Juniper (NYSE: JNPR ) exec to head up its server access and virtualization unit, realizing that fresh outside thinking is a better solution than promoting from within its tired ranks. However, other than that, the once-beloved Chambers has to be on notice. Cisco's next outside hire may be at the very top.
Which of these five moves do you think is the dumbest? Share your thoughts in the comment box below.
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